Transfers within an intangible fixed assets group and degrouping charges
Produced in partnership with Anne Fairpo of Temple Tax Chambers
Transfers within an intangible fixed assets group and degrouping charges

The following Tax practice note Produced in partnership with Anne Fairpo of Temple Tax Chambers provides comprehensive and up to date legal information covering:

  • Transfers within an intangible fixed assets group and degrouping charges
  • Transfers within a group
  • Example
  • Exceptions to tax-neutral group transfer rules
  • Degrouping charges
  • Exceptions to degrouping charges
  • Reallocation of degrouping charge
  • Restriction on use of losses

Transfers within a group

Where an intangible fixed asset is transferred from one group member to another and the asset is within the intangible fixed asset regime (IFA regime) for both group members, the transfer will be treated as tax-neutral. For information on when the IFA regime applies, see Practice Note: How intangible fixed assets are taxed—basic principles and for full details of what constitutes a group of companies for the purposes of these rules, see Practice Note: What is an intangible fixed assets group?

A tax-neutral transfer ensures that:

  1. the transfer is regarded as involving neither:

    1. a realisation of the asset by the transferor, nor

    2. an acquisition of the asset by the transferee, and

  2. the transferee is treated:

    1. as having held the asset since the date of acquisition by the transferor, and

    2. as though the transferee had done to the asset anything that was done by the transferor (for example, incurring enhancement expenditure, granting licences, etc)

As a result, the original cost of the asset is treated as though it was the transferee’s original cost, and all amortisation and other costs and receipts which have been brought into account for tax purposes as debits and credits are treated as though the transferee had incurred them.

Example

A Ltd acquires a patent in 2012 for £100,000 and amortises that patent over its useful economic life of ten years. In

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